Transfer of Life Insurance Ownership

by GO

My mother has had an life insurance policy which she, and her deceased husband, purchased over 10-years ago. She was listed as the insured, and owner, but recently shared with me that she wanted to change the ownership to me, which I blindly changed the policy ownership into my name without thinking about the potential consequences. Recently, when doing some research, and looking into qualifying her for SSI (CA), I found out that this could disqualify her from SSI for 36-months since it appears as this might fall under a transfer of resources. Is this true? If true, what can we do about it? Can we just transfer ownership back to her name? By the way, to my knowledge this policy does not have any cash value?

I had also, and recently discussed this with someone who long ago worked in SSI, and she mentioned that SSI will scrutinized the total of amount of her 25K policy. Is this true? If, the amount is an issue, what is an acceptable amount? Currently, my mother does not receive Medicaid, but will need it soon, and is in dire need of financial SSI to help her with bills.

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Mar 24, 2013
If no cash value; no problem
by: K. Gabriel Heiser

For Medicaid eligibility purposes, only the cash value of a life insurance policy (with a face value over $1,500) will count towards a person’s $2,000 countable asset limit. If indeed the policy has no cash value, then giving it away should not be penalized.

If the state nonetheless argues that the policy had a value on the date of the gift, and therefore a penalty should be imposed, you can always give (assign) it back to her or pay her the value the policy, thereby eliminating the gift. As just stated, so long as she owns it, if there is no cash value, it will not count against her when applying for Medicaid.

Please note that CA has different Medicaid (“Medi-Cal”) rules from the other 49 states so be sure to check with an attorney familiar with the local laws before acting on this information!

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--by Beth Heikkinen
Marquette, Michigan
I just want to thank you for this site. It answered my questions. I think many people that do research on the net take it for granted and when they find what they are looking for they forget "someone put time, money, etc into providing me with this information."

Thank you!

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